US offer to help India in chip production, just lip service: China

• Akhter led a semiconductors trade mission to India and met top government officials in the capital.
• The Indian semiconductor components market is likely to reach $300 billion in cumulative revenue by 2026.
• Last year, the government announced a performance-related incentive of ₹76,000 crore (PLIE) regulation in the semiconductor sector .

As the US and India join forces to address the challenges in the semiconductor supply chain, Joe Biden The government’s offer to help India build its semiconductor manufacturing capacity appears to be just lip service, according to Chinese state publication Global Times.

US Deputy Assistant Secretary, South and Central Asia Afreen Akhter said during her visit to India this week that they will help India increase its semiconductor manufacturing capacity.

Akhter led a semiconductor trade mission to India and met top officials in the capital.

According to Global Times, the announcement is intended to “lure India into a geopolitical game to exclude”. China of the global chip industrial chain, rather than a commitment to real investment plans to support chip manufacturing in India.”

The report stated that the CHIPS and Science Act, which is intended to provide $52 billion in subsidies to chip manufacturers to build manufacturing plants in the US, is an effort to build an industrial chain focused on the interests of the US, “which is unlikely to bring benefits to India.”

India has introduced a series of preferential policies to attract chip companies to invest in manufacturing in the country. Last year, the government announced a performance-related incentive (PLI) of ₹76,000 crore in the semiconductor sector to boost local manufacturing.

As India and the US double their domestic semiconductor production, China witnessed the largest-ever monthly drop in chip production in August due to Covid restrictions and dwindling demand.

That was also the second consecutive month of decline for chip production. In July, production fell 16.6 percent to 27.2 billion units.

Meanwhile, the government of Gujarat has partnered with Vedanta and Foxconn, aiming to invest ₹1.54 lakh crore to achieve self-sufficiency in semiconductor manufacturing.

The Indian semiconductor components market is likely to reach $300 billion in cumulative revenues by 2026 as “Make in India” and manufacturing incentives (PLI) will drive local sourcing of semi-components in the coming years, according to the report from the India Electronics & Semiconductor Association (IESA) and Counterpoint Research.

The report went on to say that as India wants to become a chip powerhouse, it “shouldn’t take the bait of US diplomats in hopes that the US will provide it with significant resources.”

“First, the aid that Akhter said the US would provide to India may not be delivered,” it added.

“Even if the US has chosen India as a partner in semiconductor cooperation in geopolitical calculations, it does not mean it will really help India to boost the semiconductor industry,” the report said.

The real question facing India is that if it wants to upgrade its chip manufacturing sector and move into the upstream industrial chain, “it must build a solid industrial base rather than pin its hopes on US lip service”.

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